Check Your Lumpsum Amount
The amount of money admissible to an employee at the time of retirement is one among the many deciding factors as to whether one should go for UPS or continue with NPS. While NPS offers 60% of the total corpus as the total amount payable, but UPS works differently. If you want to know, how it works, then the above UPS Lumpsum Amount Calculator is for you.
In this article, we will discuss the concepts like “the calculation of the lumpsum in UPS, formula for calculating it, and various factors that affect it”.
Table of Contents
What is UPS Lumpsum Amount?
UPS lumpsum amount is a one time payment made to an employee at the time of his retirement or voluntary retirement. It is admissible to only such employees who have switched over from NPS to UPS, and it is paid in addition to the gratuity and pensionary benefits and shall not affect the amount of assured pension anyway.
It is one among the many benefits of UPS. The others being assured pension, family pension etc.
Eligibility
In order to be eligible for this one time payment, an employee needs to fulfil the following eligibility criteria;
- he/she must have opted for UPS regime.
- he/she should have given a service of at least 120 months.
Responsible Factors
The factors that affect the amount are;
- Length of service: More the length of service and more will be the lumpsum amount.
- Basic pay & DA: The average basic pay for the last 12 months, and the last DA, are also the determinants of the amount. The more they are, more will be the amount payable.
NPS Lumpsum vs UPS Lumpsum
| Aspect | NPS | UPS |
|---|---|---|
| Lumpsum Amount | 60% of the total corpus | Variable |
| Eligibility | All NPS employees | 120 months of service |
| Responsible Factors | Monthly Contributions | Length of service, last average basic pay and DA |
| Tax Benefits | Non Taxable | No Information Yet |
How To Calculate UPS Lumpsum?
In order to calculate the amount, the Pension Fund Regulatory and Development Authority (PFRDA) of India, has given a formula, that makes use of the above determining factors to calculate the lumpsum amount payable at superannuation.
Step 1: To use the formula, we have to break the total length of service (in months) into six monthly years by dividing it by 6. It means that;
- 120 months will be broken into 20 six monthly years,
- 240 months will be broken into 40 six monthly years, so on and so forth.
Step 2: Now calculate the average basic pay for the last 12 months of an employee’s service. It can be done by adding the basic pay for last 12 months and then dividing the sum by 12.
Step 3: Now add the above calculated average basic pay and last DA%.
Step 4: Now multiply the outcome of step 1 and step 3, and then divide it by 10, and you will get the amount payable to an employee.
Formula Used
The formula used is Lumpsum amount = (basic pay + DA%)(L) 0.1
Where;
- basic pay = average basic pay for the last 12 months of service.
- DA = last DA drawn by an employee.
- L = no of six monthly years formed from the total length of service as calculated in step 1 above.
The same formula is used by the above UPS lumpsum amount calculator also.
It is pertinent to mention here, that if after dividing the service into six monthly years, a remainder of less than 6 months remains, such months shall be ignored for the purpose of calculation of lumpsum. For example; if the service of an employee is 10 years and one month (121 months) and when it is divided by 6, we get 20 six monthly years and one month as a remainder. This one month is neglected.
Why Should You Use Our Calculator
Our calculator is 100 % correct as it employs the same logic and formula that has been given by PFRDA India. We have also cross checked it with all the examples given by the concerned agency, and it has passed all the tests. However, we still urge you to consult a financial advisor before proceeding to take any financial decisions.
FAQs
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What will be the lumpsum amount payable to an employee who has a service of 242 months, and the average basic pay = ₹50000, and the last DA = 50%.
Here basic pay = ₹50000, and DA = 50% = 25000, L = 40 six monthly years.
So lumpsum amount = (₹50000 + ₹25000)(40)(0.10) = ₹300000 -
What is the effect of my UPS pension on my lumpsum amount?
Both pension as well as the lumpsum amount have basic pay as an important determining factor. But, both work independently of each other. The amount of lumpsum admissible in an employee’s favor does not affect other UPS monetary benefits, and vice versa.
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How are individual corpus and benchmark corpus going to affect the UPS lumpsum amount?
UPS lumpsum is independent of the individual corpus and benchmark corpus. They affect the UPS pension but not the lumpsum. The lumpsum depends only upon the length of service, last average basic pay and last DA.
